Since you're scalping ESM5 on a 500T chart with RSI (3, Close), let's optimize it for faster, more accurate signals. Here’s the breakdown:
1. RSI (3, Close) for Scalping: Pros & Cons ✅ Why It Works Lightning-fast signals (3-period reacts instantly to price changes).
Fits the ultra-short-term nature of 500T scalping.
“Close” input avoids noise from wicks.
❌ Pitfalls to Fix Whipsaws in choppy markets (false overbought/oversold signals).
Lags slightly vs. price (since it uses closing values).
2. Optimal RSI (3) Settings for 500T Scalping Setting Recommended Value Why? Length 3 Matches 500T speed. Input Close (default) Cleanest for scalping. Overbought 70 → Lower to 65 Fewer false signals. Oversold 30 → Raise to 35 Fewer false signals. Smoothing None (RSI raw) Avoid lag from MA smoothing. 🔹 How to Adjust:
Right-click RSI → “Settings”.
Modify values as above → Click “OK”.
3. Advanced Tweaks (For Fewer False Signals) A. Change Input to “Median Price” (H+L)/2 Why? Incorporates high/low volatility, reducing whipsaws.
How: In RSI settings → Change “Input” to Median Price.
B. Add a 2-Period SMA to RSI (Smoothing) Why? Softens extreme spikes without adding lag.
How:
Add “Moving Average” indicator to your chart.
Set:
Input = RSI (select your RSI line).
Period = 2.
Type = SMA.
RSI (3) + 2 SMA Example (Raw RSI in purple, smoothed RSI in orange—trade crossovers.)
4. How to Trade RSI (3) on 500T Long Scalp Setup Price > VWAP + 9 EMA.
RSI (3) dips below 35 → Buy when it crosses back up.
Exit: RSI > 65 or price hits 2-tick profit.
Short Scalp Setup Price < VWAP + 9 EMA.
RSI (3) spikes above 65 → Sell when it crosses back down.
Exit: RSI < 35 or price hits 2-tick profit.
5. When to Ignore RSI (3) Signals Choppy markets: If VWAP is flat and price keeps crossing it, RSI will whipsaw.
High-impact news: RSI becomes unreliable during events like NFP.
6. Pro Tip: Combine with Order Flow Confirm RSI signals with:
Bid/Ask Volume Imbalance (DOM or footprint).
Cumulative Delta (green/red bars).
Final Checklist ✅ RSI (3) length + tightened OB/OS levels (65/35). ✅ Input = Close or Median Price (test both). ✅ Optional: Add 2-period SMA to smooth RSI. ✅ Only trade RSI signals aligned with VWAP/EMA trend.
Need help testing this live? Let me know—I’ll guide you through a real-time example! 🚀